Alibaba wins Unfair Competition action against Click Farm Company in China

In June 6th, Alibaba Group, the leading Chinese company in e-commerce, received a favorable decision on unfair competition lawsuit from the Hangzhou Intermediate People’s Court against a click farming company, Hangzhou Meiming Technology Co., Ltd (hereafter as the Defendant). This is the very first case filed by E-commerce company since the launching of the new unfair competition law in China.

In common definition, click farming is a form of click fraud to artificially boost the standing or status of a website by paying for increased clicks on paid advertising links or increased likes or followers. Particularly on online marketplaces, the main object of click farming activities is to boost certain listings by fake reviews and/or fraudulent sales volumes. To do so, it requires more than just clicking links.

The Defendant established an online platform called “meilipa” which was advertised as a platform, on one hand, allowing consumers to obtain “free testers or samples”, and on the other hand, helping vendors to “improve” their credibility on Taobao and TMALL, Chinese marketplaces of Alibaba Group. By setting up specific procedure for obtaining “free testers or samples”, the Defendant guided users on “meilipa” platform to order targeted products on Taobao and TMALL with notification that a testers or samples (of which the values are much lower than the real product) would be delivered to the users. After one order was completed on Taobao or TMALL, the user would then receive full amount of the payment on Taobao or TMALL back through the “meilipa” platform. In this way, the vendors were able to create a highly inflated amount of transactions and reviews on the online marketplace, with payment to the Defendant.

The Court held that the “meilipa” platform adopts unfair means to help untrustworthy merchants to artificially inflate their standing and credibility on Taobao marketplace, which interferes with free and fair market order. The Defendant is also ordered to compensate Taobao’s economic loss for 2 million RMB (approx. 252,000 Euro) .

This case is another example of Alibaba Group taking serious actions to preserve and restore its reputation as the leader of Chinese online marketplaces where many brand owners pay tremendous attention. IP TWINS always keep close eyes on any substantial moves in the online world for the interests of brand protection. Should you like to know more about our service on online brand protection, please do not hesitate to contact us.